Abbott India Share Price Jump by 5% on Impressive Q4 Results, Record Dividend Payout

Abbott India share price climbed 5% in early trading today, buoyed by the company's robust performance in the January-March quarter. Additionally, the company announced its highest ever dividend payout, drawing significant investor interest. By 09:17 am IST, Abbott India's shares were trading at ₹26,419.20 on the National Stock Exchange (NSE).

As per the BSE filing of Abbott India dated May 9, "the Board of Directors at its Meeting held today i.e., May 9, 2024, recommended payment of final dividend of ₹410/- per equity share of ₹10/- each for the year ended March 31, 2024, subject to approval of the Shareholders at the ensuing Eightieth Annual General Meeting of the Company scheduled to be held on August 8, 2024."

Impressively, the company's net profit increased by 26.5% in FY24, with its dividend payout expanding at a similar rate over the fiscal year. The record date for determining the eligibility of members to receive the final dividend for FY24 has been set for July 19, 2024.

Over the past five years, the company has experienced its dividend payout growing faster than its profit. Specifically, while the net profit has risen at a compounded annual growth rate (CAGR) of 22% from FY20 to FY24, the dividend per share (DPS) has escalated at a CAGR of 45% during the same timeframe. This rapid growth in dividends stands in stark contrast to the more modest revenue growth of approximately 10% over the same period.

In addition to the attractive dividend, the drugmaker's robust earnings for the fourth quarter also appealed to investors. The company reported a net profit of ₹287 crore for the quarter, marking a 24% increase year-over-year and surpassing expectations. This performance exceeded the Bloomberg consensus estimate, which had projected revenues of ₹278 crore for the quarter.

The revenue for the quarter under review increased by 7.1% year-over-year to ₹1,439 crore. However, revenue growth for the maker of the well-known antacid Digene was modest this quarter. This subdued performance was due in part to pricing restrictions following the inclusion of some of its medicines on the government's essential medicines list in September 2023. 

Abbott India's operational performance showed marked improvement with a significant expansion in EBITDA margin. In the March quarter of financial year 2024, the EBITDA margin rose by 200 basis points, reaching 22.9%, compared to 20.9% in the same quarter of the previous year. This enhancement underscores the company's effective management and operational efficiencies.

The 52-week trading range for Abbott India's shares shows a high of ₹29,628.15 and a low of ₹20,594.25 each. According to the Bombay Stock Exchange (BSE), Abbott India has a market capitalisation of ₹56,359.42 crore.

Located in Mumbai, Abbott India Limited offers a range of medications in various therapeutic areas, including women's health, gastroenterology, cardiology, metabolic disorders, and primary care.

Revenues for pharmaceutical companies like Abbott India and GlaxoSmithKline Pharma India, which derive a significant portion of their business from the Indian market, have been affected by the inclusion of some of their drugs on the government’s essential medicines list in September 2022. This inclusion subjects these drugs to price regulation, impacting revenue streams for these companies.

Abbott India, a subsidiary of the U.S. based healthcare company Abbott Laboratories, has been actively working to counteract the effects of pricing restrictions. The company is focusing on increasing sales volumes and reducing operational costs as part of its strategy to mitigate the financial impact of these regulatory price controls.